History & Evolution
Telecom penetration is only 60.99% in India which implies that there is huge potential for growth in the country where there is a large youth population. But Average revenue per user (ARPU) is decreasing rapidly ($ 4.5) because of the price wars (rate per minute approximately $ 0.01 ) in telecom industry. With new SIM cards being sold at take away prices the switching cost for the prepaid users is negligible as they can switch to any telecom service provider which gives the best prepaid deals. So it has become a buyers’ market which is decreasing the profit margins for all the telecom service providers. The first people to buy cellular telecom connections in India were corporate users. Slowly, the user base spilled over to personal users as the price point got lowered every month. Now the individual user wants more and he will get more. VAS and innovative tariff plans are two critical elements which provide an enhanced customer experience and value for money to the customers. ( http://economictimes.indiatimes.com/features/financial-times/The-telecom-triangle-Subscribers-price-VAS/articleshow/6801561.cms)
Value added services (VAS) generate only 12.7% of the wireless market revenues but it is tipped to be the fastest growing market in the world. More usage of VAS can increase APRU so main focus of telecom providers is VAS in urban markets. Airtel continuously consolidating its market leadership position despite intense competition. It has the largest private operator having presence in the voice, broadband, IPTV and data in India. Various VAS are shown in Appendix A. Growth strategies for Airtel are shown in Appendix B. It mainly focuses on increasing ARPU and reducing costs which is applicable to all the Indian telecom providers. (Source: Investor Report – Bharti Airtel Nov 2010)
Telecom providers have started sharing telecom...